Athens Remains Defiant As Bailout Deadline Looms

Greece exitU.S. stocks are under pressure at the start of the week on Monday largely based on concerns of a Greek exit from the euro and weaker than expected import/export data from China.

China’s trade performance declined in January with exports falling 3.3 percent and imports tumbling 19 percent.

Over the week-end, Greece Prime Minister Alexis Tsipras maintained a defiant stance from Athens and offered to steer Greece away from requesting an additional bailout package through its creditors that is loaded with an austerity program for a country that has managed to overspend is budget in the past and remains skittish about continuing down the course of fiscal reform.

Greece is left carrying €320 billion ($362) in public debt which is now over 180 percent of GDP.

Greece’s new leftist leaders were unyielding last week when traveling across EU capitals and revealed little interest in asking for an extension of their bailout package before the February 16th deadline.

Instead they are seeking for a write off on their debts and are aiming to increase public sector spending while unwinding a property tax.

Officially, Greece’s €240 billion ($272 billion) bailout package expires on February 28th.

If Greece fails to receive an additional bailout package before February 28th, they are set to default on their loans and could move down the unknown path of exiting the euro.

A few other countries in the euro area holding high debt to GDP ratios that have already swallowed the austerity diet pill and hold similar  bailout packages are watching the developments in Greece closely.

If Greece is successful in receiving concessions and a write off from its creditors to avoid a default, the move will set a new precedent in the euro area and could embolden other anti-austerity movements across Europe to seek a similar course.

-Johnathan Schweitzer

 

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